After Gina Signor’s Lexus was damaged in an accident Safeco declared the vehicle a total loss under her automobile insurance policy. Under the policy, Signor was due the “actual cash value,” or “ACV,” of the vehicle. To determine the ACV, Safeco used the Certified Collateral Corporation ONE Market Valuation System, also known as the “CCC System.” The CCC report began with dealer-advertised prices for 12 vehicles comparable to Signor’s (same made, model, and year), and then applied a “Uniform Condition Adjustment” to account for the fact that Signor’s vehicle was in “Normal Wear” condition at the time of the accident, whereas the 12 comparable vehicles were in “Dealer Ready” condition. CCC averaged the resulting 12 values to arrive at a starting ACV of $17,377. CCC then added a “component condition adjustment” of $589, based on the above-average condition of Signor’s particular vehicle, resulting in an ACV of $17,966. Safeco also paid Signor for taxes and state-mandated fees.
Signor challenged the valuation, ultimately filing a putative class action against Safeco. Signor argued that the insurer’s use of the CCC report, including the application of a uniform condition adjustment, violated Florida law, and that Safeco should have included in her settlement an additional amount to cover dealer fees for the purchase of a replacement vehicle. The district court granted Safeco’s motion for summary judgment. Signor appealed, and a divided panel of the Eleventh Circuit affirmed. Signor v. Safeco Ins. Co. of Illinois, 72 F.4th 1223 (11th Cir. 2023)
The majority opinion, written by Judge Jill Pryor, analyzed Signor’s challenges against the language of the relevant statute, which permits the insurer to “elect a cash settlement based upon the actual cost to purchase a comparable motor vehicle.” Fla. Stat. § 626.9743(5). Subsection (a)(1) of the statute provides that the “actual cost to purchase a comparable motor vehicle . . . may be derived from” one of three methods, including “[w]hen comparable motor vehicles are available in the local market area, the cost of two or more such comparable motor vehicles available within the preceding 90 days. . . .” Signor claimed that Safeco failed to comply with this section by using a report that adjusted the prices of the comparable vehicles and that used advertised prices, rather than sale prices, of comparable vehicles. She also claimed that Safeco violated subsection (a)(2) of the statute, which permits an insurer to determine retail cost using a “generally recognized used motor vehicle industry source.”
Noting that “[t]he meaning of this statute is a question of first impression in our Circuit” and that the court had found no authoritative interpretation from Florida’s appellate courts, the majority rejected Signor’s challenges. The statute refers to sources from which the actual cost to purchase a comparable vehicle “may be derived,” the majority noted; the statute does not say that the ACV must be “equal to” the source costs. Further, the statute requires only that the cash settlement be “based upon” the actual cost to purchase a comparable vehicle. “Thus, we conclude that an insurer’s calculation of actual cost must originate from one of the three enumerated methods. . . .The statute does not require that a settlement based upon the vehicle’s actual cost be equal to the actual cost to purchase a comparable vehicle.” So the application of the uniform condition adjustment did not violate the statute. Nor did the use of advertised versus sale prices violate the statute, because subsection (a)(1) refers to vehicles “available” in the local market area—“It does not matter, under the statute’s plain language, whether the vehicle was sold.”
The court also rejected Signor’s argument that Safeco’s use of the CCC system violated the statute because, according to Signor, the system was not a “generally recognized used motor vehicle industry source,” as required by subsection (5)(a)(2). The CCC report could be used in compliance with subsection (5)(a)(1) without also meeting the requirements of (5)(a)(2)—“an insurer is not required to comply with more than one of the enumerated methods listed under subsection (5)(1).” And, under accepted canons of statutory construction, the requirement of a “generally recognized used motor vehicle industry source” applied only to (5)(a)(2).
Finally, the court held that the trial court properly granted Safeco’s motion for summary judgment on Signor’s claim that her settlement should have included an amount for dealer fees. In Mills v. Foremost Ins. Co., 511 F.3d 1300 (11th Cir. 2008), the court held that a general contractor’s charges had to be included in the insurer’s ACV calculation for a mobile home if the insureds “would be reasonably likely to need a general contractor . . . .” Applying the same logic to Signor’s claim, dealer fees “must be reasonably likely to be necessary for the insured to incur” before they will be a required element of the insurer’s ACV calculation. Signor had presented evidence that most policyholders are likely to purchase replacement vehicles from dealers, and that most dealers (85%-95% of them) charge dealer fees. But those facts “do not show that a policy holder is reasonably likely to need to purchase a replacement vehicle from a dealer,” and therefore the ACV settlement did not have to include dealer fees.
Judge Grant dissented with respect to the propriety under the Florida statute of Safeco’s adjustments to the prices of comparable vehicles. “Under the plain meaning of the statute,” she wrote, “Safeco’s number was neither ‘actual’ nor the ‘cost,’ and it did not reflect the money needed to purchase a ‘comparable’ vehicle.” “The better interpretation” of the statute, in her view, “is that ‘derived from’ restricts the source material and ‘based upon’ recognizes certain settlement-specific adjustments,” not a uniform adjustment to the prices of all the comparable vehicles considered.
Posted By: Valerie S. Sanders